Detecting Tremors in Natural Gas

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

It takes a seismic shift to flip a runaway energy bull market completely onto its backside.

Fools eager to ascertain when the sector might start heating up again could keep an eye on Dawson Geophysical (Nasdaq: DWSN  ) for clues. This company knows a thing or two about interpreting data, and its recent earnings release provides a 3-D image of an industry in the process of rebalancing supply and demand.

Dawson reported flat earnings of $7.7 million for the fiscal first quarter of 2009, on a 3% rise in revenue. EBITDA managed a 7% increase, but the quarter overall exhibits a seismic shift compared with the 29% earnings growth the company reported back in fiscal Q4 2008.

Responding to leaner times, Dawson announced a 25% reduction in operations by idling as many as four of the 16 active seismic survey crews. With some larger projects facing scaledowns and delays, and some being canceled outright, the move is only prudent, given the prevailing indications from natural gas producers. Chesapeake Energy (NYSE: CHK  ) , Devon Energy (NYSE: DVN  ) , and EOG Resources (NYSE: EOG  ) have each idled rigs and scaled back production targets in response to continued weakness in natural gas prices and demand.

Dawson Geophysical is hardly the only energy services provider feeling the pinch. The Oil Service HOLDRS Trust (NYSE: OIH  ) exchange-traded fund, heavily weighted in large-cap names such as Schlumberger (NYSE: SLB  ) , remains more than 60% below its 52-week high. For sheer upside potential over the long term, however, I continue to recommend Dawson Geophysical, even during these tumultuous times.

Fellow Fool Dave Smith prefers Dawson's marine-based competitor CGG Veritas (NYSE: CGV  ) , noting its sizable backlog and earnings that seemed undeserving of the stock's continued punishment. Back on dry land, Dawson gets my vote by virtue of its smaller size, adaptable business structure, and splendid balance sheet.

With a market capitalization of just $135 million, Dawson retains the kind of under-the-radar growth potential that caught the eye of our stock-picking team at Motley Fool Hidden Gems. With no long-term debt, $40 million in available credit, and about $2 per share in cash, the company appears well-positioned for the downturn. Given its adaptability -- seismic crews can be reactivated nearly as easily as they're idled -- I believe Dawson Geophysical will indeed prove to be a gem. I've just added the company to my CAPS portfolio, and I invite you to do the same.

Further Foolishness:

More than 2,600 Motley Fool CAPS members have selected five-star-rated Dawson Geophysical to outperform the broader market. Join our free online investing community today and share your own thoughts.

Fool contributor Christopher Barker captains yachts and writes about stocks. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Chesapeake Energy. CGG Veritas is a Motley Fool Global Gains pick. Dawson Geophysical is a Motley Fool Hidden Gems recommendation. Chesapeake Energy is a Motley Fool Inside Value selection. The Motley Fool has a gaseous disclosure policy.

Read/Post Comments (1) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 827537, ~/Articles/ArticleHandler.aspx, 10/23/2016 12:36:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
DWSN $7.26 Down -0.24 -3.20%
Dawson Geophysical CAPS Rating: ***
CGG $29.45 Down -0.09 -0.30%
CGG Veritas CAPS Rating: No stars
CHK $6.68 Down -0.23 -3.33%
Chesapeake Energy CAPS Rating: ***
DVN $42.69 Down -0.25 -0.58%
Devon Energy CAPS Rating: ****
EOG $93.88 Down -1.03 -1.09%
EOG Resources CAPS Rating: ****
SLB $80.47 Down -2.52 -3.04%
Schlumberger CAPS Rating: ****